American Exceptions

The two great bottom-line phrases of modern life are: “Put your money where your mouth is” and, regarding fact-checking and getting to the meat of any operation, “Follow the money.”

Mitt Romney’s mouth is certainly in this country. “Believe in America” is his campaign mantra, as ubiquitous as a pop-up flag on his Web site, and bannered at every rally. The president’s policies, he said this week by way of comparison, “are extraordinarily foreign.”

But Romney’s own money is somewhere else, showing that he’s willing to bet against America — its currency, its tax system, its safety as a place for capital. Anyone who wants to lead this nation, and stashes millions of dollars in foreign banks, overseas financial havens and byzantine accounts in countries without tax or regulation, had better be prepared to defend that financial betrayal.

Yet Romney will not defend it, even though there’s a decent free-market argument for how his fortune found a refuge offshore.

That’s the crux of one of the biggest obstacles standing between Romney and the White House. The “Swiss-yachting” of Romney is about whether you put your chips on your own country or on other nations.
Romney has shown the same instincts as Eduardo Saverin, a co-founder of Facebook with a net worth of about $2 billion, who chose to renounce his United States citizenship and park his money elsewhere rather than pay American capital gains taxes. This despite the fact that the richest 1 percent in the United States are paying the lowest tax rate in 80 years.

Romney walked into this trap, and could explain his way out of it. But that would require intellectual honesty, as challenging for him as it is for Michele Bachmann to get through a day without making something up. Romney could say that in the globalized era, money goes where it wants to go, to paraphrase Woody Allen’s line about the heart. Hey, those Ralph Lauren uniforms of our American athletes — made in China! Get used to it.

Instead, he has chosen to make his campaign about “American exceptionalism,” a U.S.A. uber alles slogan that applies, apparently, to Olympic sports and diplomacy but not to his massive wealth. He looks the very definition of an empty suit whenever he utters a riff on this platitude.

On the campaign trail this spring, Romney recalled traveling abroad as an executive at Bain Capital, “standing a little taller, a little straighter, because I knew I had a gift that others didn’t have, and that was, I was American.” In all likelihood, he was visiting his money overseas at the time of this epiphany.

Or he could blame it all on President Obama, as his inept surrogates have been trying to do — saying that the president’s onerous tax policies have driven good capitalists like Romney to seek shelter in the Swiss alps or the Cayman sands.

The only problem with that argument is that Romney’s overseas investments span the Clinton, Bush and Obama years. Vanity Fair detailed a Bermuda corporation “wholly owned by W. Mitt Romney” set up in 1997. By the time of his 2010 tax returns — the only full year Romney has revealed — a full 55 pages of his return “are devoted to reporting his transactions with foreign entities.”

Against this backdrop, one of the most devastating political ads of the last decade — Romney warbling “America the Beautiful” while the screen shows his tax havens and foreign shelters — hit its target like a bunker-busting bomb. Those are his American exceptions.

What’s wrong with American banks? American businesses? American start-ups? American treasuries? If Romney answers that the tax code is too hard on the rich, on job-creators, then how does he explain 23 million new American jobs created under Bill Clinton, the only president in the last 20 years to significantly raise taxes?

How does he explain that his father, running for president in 1968, paid an effective tax rate of almost 50 percent, at a time of robust job creation, while Mitt paid less than 15 percent and whines that taxes have to come down further to get things moving?

And that’s the other part of the Romney dilemma: his policy prescriptions match his personal financial moves. He set up an I.R.A., tax-free before withdrawal, just like millions of other Americans. This is the private-sector answer to Social Security.

But then as the money grew, Romney moved much of that already generously protected bundle — upward of $102 million according to personal disclosures — to shelters in the Caribbean. It’s no mystery why he did this: places like the Caymans impose no taxes, and very few regulations.

Romney promises to govern as he invests. He wants to overhaul the tax system so that overseas profits of American corporations would escape United States taxation. This would create an incentive for corporations to shift even more jobs and capital overseas. Obama, by contrast, wants to give tax credits to companies that make new hires in the United States.

A consumer of politics, just like an investor, should practice due diligence. Forget what Romney says about American exceptionalism; look at his American exceptions. Given all the heat he’s taken of late, if Romney could retroactively invest he might plant less of his fortune under other countries’ flags. Alas, it doesn’t work that way, or we’d all own Apple at two bucks a share.

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Timothy Egan worked for The Times for 18 years – as Pacific Northwest correspondent and a national enterprise reporter. His column on American politics and life as seen from the West Coast appears here on Fridays. In 2001, he was part of the Pulitzer Prize-winning team that wrote the series “How Race Is Lived in America.” He is the author of several books, including “The Worst Hard Time,” a history of the Dust Bowl, for which he won the National Book Award, “The Big Burn: Teddy Roosevelt and the Fire That Saved America” and, most recently, “Short Nights of the Shadow Catcher: The Epic Life and Immortal Photographs of Edward Curtis.” As of October 2013, Timothy Egan’s column can be found in a new location in the Opinion section »